Andalusite market tightens up

By Davide Ghilotti
Published: Thursday, 14 December 2017

Market patterns in the andalusite trade are likely to change next year because suppliers are fixing shorter contracts while demand is high and output is limited - prices are set to increase.

Tightness in supply and higher prices will characterize the andalusite market throughout 2018 - availability is set to remain limited, forcing buyers to seek other sources of raw materials.

With the broad balance between supply and demand in the sector over the past few years giving way to a shortage in 2017, consumers are concerned about security of future supply.

Heavy rains at the start of this year in South Africa, the world’s largest producer, curtailed local output and exacerbated shortness prompted by flooding issues in Peru, the other main origin of the refractory mineral, in the first quarter.

Production restarted and ramped up following the unfavorable weather. Still, global output in 2017 is set to remain below total demand. Several consumers and distributors speaking to Industrial Minerals this year regularly highlighted delays in consignments and lower volumes shipped.

According to some market participants, the andalusite market could be short by as much as 30,000 tonnes by the end of 2017. But other participants involved in the supply of the mineral reckoned this estimate to be "too pessimistic."

Additionally, some believe a large proportion of the shortage created this year will have a direct effect on 2018 availability because a large volume of those volumes that could not be shipped this year will be deferred to next year. 

It is possible that some 2018 volumes will be needed to cover 2017 contractual agreements, some market participants conceded. Others, however, added that this is likely only in some cases because users would have to find immediate replacement of material and may not be willing - or able - to wait for deliveries to reach them several months later.

On the supply front, Imerys - the single largest producer of andalusite, with operations in France and South Africa - has been aiming to expand output to meet the additional demand. 

The miner told Industrial Minerals it has been able to "produce 30% more andalusite compared to what was produced in the first half of 2016." It upgraded the flotation workshop at the Glomel site in France and brought online a previously decommissioned crushing plant in Thabazimbi, South Africa, as well as new equipment in Annesley.

"There is a willingness to increase production on the part of most producers," one distributor told Industrial Minerals, adding that high demand makes for good business prospects. 

"But the weather issues can put a spanner in the works. If it rains heavily during the wet season, as it did early this year, the facilities are inaccessible. You can only do so much to prevent that," he added.

Andalusite is used for monolithic linings in the steel industry,
particularly in blast and electric furnaces. It is also used in
the glass industry and in cement kilns.

Shorter contracts

Amid the volatility that is affecting raw materials including bauxite, alumina and magnesia, trading patterns in andalusite are expected to change from 2018, giving way to shorter contracts.

At the time of writing late in November, contracting activity from suppliers and buyers of the mineral seem to confirm this pattern. 

Until now, andalusite selling was mostly settled through year-long contracts. Due to the market shortage, suppliers stated they cannot commit to price over 12 months; in many cases, they have settled shorter contracts, mainly for six months. 

One seller told Industrial Minerals he has closed deals mainly for the first half. 

Another contractual option is to agree on volumes for 12-month supply but to fix the price only for the first half of the year, leaving the possibility to review the price for the second half.

Industrial Minerals is aware that some volumes have been booked through this arrangement.

Andalusite production worldwide (tonne)*
* Not including China, France production
Source USGS 

Prices on the up

The conditions in place could lead to higher andalusite prices for 2018 material, according to sources.

Still, andalusite is not a market that displays the type of volatility seen recently in, say, bauxite or magnesia. In that sense, a doubling of the price in a matter of months - such as was the case for Chinese DBM or European FM - seems unlikely for now.

While market participants have been particularly cagey on contractual offers for next year, most industry sources predicted a price increase of around 10-15%. Some customers that buy large volumes said they are confident of achieving a lower increase of around 5-10%.

"All my selling prices are increasing, depending on the existing ones: those who had a lower price may see a higher increase, while for those who were already paying a high price, the increase may be small," one supplier said.

Other factors that are bound to affect delivered prices are exchange rates and freight costs.

Industrial Minerals’ 2017 contract prices of andalusite, min 57% Al2O3, stood at €240-290 ($282-341) per tonne fob South Africa and at €355-425 per tonne cif Europe.

Andalusite in brief

Andalusite, kyanite and sillimanite are aluminosilicate minerals, with high Al2O3 content varying from 63% (high-grade) to less than 40% (low-grade), and silica content of about 37%.

The minerals have the same chemical composition, but differ in their structure and physical properties.

Under heating, all three minerals transform to make mullite, an ideal refractory material, which contains as much as 72% Al2O3 and melts at 1,850°C.

Mullite is made of needle-like crystals, which gives the material high load-bearing capacity at elevated temperatures.

Andalusite converts to mullite when heated at temperatures between 1,300°C and 1,550°C. It is the best source of mullite because its unique microstructure traps the liquid silica released in the process called mullitisation.